High Street lenders planning to set aside billions to help struggling homeowners hit by coronavirus

Households hit by the coronavirus outbreak could be eligible for mortgage ‘holidays’ of up to three months, it emerged yesterday.

NatWest, Royal Bank of Scotland, and Ulster Bank – which are part of the same state-backed group – confirmed they may defer the mortgage repayments of customers who fall into financial difficulty.

Those eligible could include small business owners who have suffered a slump in income, and self-employed workers who are forced to self-isolate at home.

With growing fears the outbreak could hammer the UK economy, NatWest said it was ‘monitoring the potential impact of coronavirus across all our customers to ensure we can support them appropriately through any period of disruption’.

Stressing that all applications for a mortgage holiday will be looked at on a case-by-case basis, the bank added: ‘We understand that there may be circumstances where a personal customer may fall into financial difficulty as a result of the impacts of coronavirus, for instance, loss of income.’

As Italy suspended mortgage repayments and households bills while the country is locked down, NatWest pledged £5billion of funding to provide loan repayment holidays of up to six months for struggling small firms as well as short-term emergency loans with no fees.

TSB said it would offer a reprieve of up to two months, waive penalties to enable customers to dip into their savings and increase credit limits on credit cards.

Britain’s biggest lender Lloyds Banking Group – which includes Lloyds and Halifax – said it would offer ‘payment holidays’ on mortgages and loans to those who needed it. It will also ditch fees for missed payments on credit cards, loans and mortgages for struggling customers.

Lloyds pledged £2billion of new loans for small firms to help those with cash-flow problems cope with the virus.

Although Santander did not explicitly pledge to offer mortgage holidays, it said it would consider deferring or reducing repayments on a case-by-case basis.

But Barclays indicated it did not offer mortgage holidays. Instead, it said homeowners who fell behind on their mortgage could apply to have penalty charges removed so they can raid their savings accounts or apply for a temporary increase on their credit limit.

Lenders stressed that this type of assistance is available for customers in financial difficulty for any reason, not just the coronavirus.

Banks have come under pressure to support struggling businesses and households. The industry was heavily criticised during the financial crisis for allowing companies to go to the wall by starving them of vital loans. 

Chancellor Rishi Sunak is expected to unveil measures in today’s Budget to prop up small firms hit by the outbreak.

These could include setting up a ‘hardship fund’ to provide them with emergency cash and encouraging banks to lend by underwriting cheap loans.

There are fears that many households and businesses will be squeezed if officials advise anyone with a cold to stay at home for a week to help slow the spread of coronavirus. 

Although employers have to offer sick pay to workers who self-isolate, there are fears that freelance and contract workers will not get paid.

Among those hardest hit by the outbreak include business owners in the hospitality industry.

Airline staff are being temporarily laid off as thousands of flights are cancelled. Norwegian Air, which flies from several UK airports, yesterday said it would temporarily lay off cabin crew after axing 3,000 flights between now and mid-June.